Tampa -- NCTC-Winter Educational Conference – James McQuivey, a vice president and principal analyst at Forrester Group, said he’s not trying to put a scare into independent operators here, but his keynote certainly set the tone by encouraging them to be wary of and to prepare to deal with the “digital disruption” they are facing from the likes of Amazon, Google, Facebook, and perhaps even other cable operators.
“We’re heading into a time of great change,” said McQuivey (pictured at left), noting that the model for digital disruption greatly accelerates the pace of new ideas, both big and small, while also producing them at a fraction of the cost.
Although many worry that Amazon, Sony, or Google and its YouTube unit will go over-the-top with a virtual pay-TV service that competes directly with cable operators, McQuivey said that these digital platforms are really looking at TV as a way to maintain and grow their connection with the consumer, and to get them further hooked into their respective platforms.
TV, he pointed out, still absorbs more than four hours of a consumer’s attention each day, attention they want a piece of. “It’s all about minutes… minutes of time and attention,” McQuivey said. TV represents the “low-hanging fruit of time and attention.”
Video, he said, is “bait” to help these companies create larger and stronger connections to the consumer, noting that Apple iTunes originally used music as that bait.
McQuivey also shared some controversial opinions on how MSOs such as Comcast could pursue the consumer market in the years ahead, predicting that it’s only a matter of time before it goes out of footprint with its Streampix service and possible more. “They will compete with you,” McQuivey said.
He said the desire for a larger footprint and the consolidation costs is “not sufficient” to explain Comcast’s long-term interest in proposed acquisition of Time Warner Cable. The deal will put Comcast “in a better position to invest outside their footprint,” he predicted. “I think Comcast will be competing outside of the video footprint.”
While offering Streampix out-of-footprint might be the first move, not everyone agrees that going out outside of one’s franchise area with a full-freight video service makes much business sense today for most operators. In this recent Multichannel Newscover story (subscription required), analysts and industry insiders concede that MSOs are seeking the rights necessary to go out-of-footprint, but warn that the margins for such an offering are not yet attractive, making it a non-starter…for now.
But the idea of offering a service like Streampix out of market or perhaps on a national level in partnership with other MSOs does hook into McQuivey’s other point – that digital disruption isn't about simply something coming in and replacing something.
“Most industries that get hit by digital...get expanded by digital,” he said, urging the audience to think about how they can position themselves to benefit financially from that expansion.
“If we’re too insular in our thinking and just competing with DSL or the future of wireless broadband…we might miss the chance to see that someone is riding in over-the-top and building a stronger relationship.”
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